Regulations of Connecticut State Agencies
(a) Independence. A licensee shall not express an opinion on financial statements of an enterprise in such a manner as to imply that he is acting as an independent public accountant with respect thereto unless he is independent with respect to such enterprise. Independence will be considered to be impaired if, for example:
(1) During the period of his professional engagement, or at the time of expressing his opinion, the licensee:
(A) Had or was committed to acquire any direct or material indirect financial interest in the enterprise; or was a trustee of any trust or executor or administrator of any estate if such trust or estate had or was committed to acquire any direct or material indirect financial interest in the enterprise; or
(B) Had any joint closely-held business investment with the enterprise or any officer, director or principal stockholder thereof which was material in relation to the net worth of either the licensee or the enterprise; or
(C) Had any loan to or from the enterprise or any officer, director or principal stockholder thereof other than loans of the following kinds made by a financial institution under normal lending procedures, terms and requirements:
(i) Loans obtained by the licensee which are not material in relation to the net worth of the borrower; and
(ii) Home mortgages; and
(iii) Other secured loans, except those secured solely by a guarantee of the licensee.
(2) During the period covered by the financial statements, during the period of the professional engagement, or at the time of expressing an opinion, the licensee:
(A) was connected with the enterprise as a promoter, underwriter or voting trustee, a director or officer or in any capacity equivalent to that of a member of management or of an employee; or
(B) was a trustee for any pension or profit-sharing trust of the enterprise. The foregoing examples are not intended to be all-inclusive.
(b) Integrity and objectivity. A licensee shall not in the performance of professional services knowingly misrepresent the facts, nor subordinate his judgment to others. In tax practice, however, a licensee may resolve doubt in favor of his client as long as there is reasonable support for his position.
(c) Commissions. A licensee shall not pay a commission to obtain a client, nor accept a commission for a referral to a client of products or servs of others. This rule does not prohibit payments for the purchase of all, or a material part, of an accounting practice, or retirement payments to persons formerly engaged in the practice of public accountancy, or payments to the heirs or estates of such persons.
(d) Contingent fees. A licensee shall not offer or perform professional services for a fee which is contingent upon the findings or results of such services; provided however that this rule does not apply to professional services involving federal, state, or other taxes in which the findings are those of the tax authorities and not those of the licensee, nor does it apply to professional services for wh the fees are to be fixed by courts or other public authorities and which are therefore indeterminate in amount at the time the professional services are undertaken.
(e) Incompatible occupations. A licensee who is engaged in the practice of public accounting shall not concurrently engage in any business or occupation which would create a conflict of interest in rendering professional services.
(f) Competence. A licensee shall not undertake any engagement for the performance of professional services which he cannot reasonably expect to complete with due professional competence, including compliance, where applicable, with subsections (g) and (h) of this section.
(g) Auditing standards. A licensee shall not permit his name to be associated with financial statements in such a manner as to imply that he is acting as an independent public accountant with respect to such financial statements unless he has complied with applicable generally accepted auditing standards. Statements on auditing standards issued by the American Institute of Certified Public Accountants, and other pronouncements having similar generally recognized authority, are considered to be interpretations of generally accepted auditing standards, and departures therefrom must be justified by those who do not follow them.
(h) Accounting principles. A licensee shall not express an opinion that financial statements are presented in conformity with generally accepted accounting principles if such financial statements contain any departure from such accounting principles which has a material effect on the financial statements taken as a whole, unless the licensee can demonstrate that by reason of unusual circumstances the financial statements would otherwise have been misleading. In such a case, the licensee's report must describe the departure, the approximate effects thereof, if practicable, and the reasons why compliance with the principle would result in a misleading statement. For purposes of this rule, generally accepted accounting principles are considered to be defined by pronouncements issued by the financial accounting standards board and its predecessor entities and similar pronouncements issued by other entities having similar generally recognized authority.
(i) Forecasts. A licensee shall not in the performance of professional services permit his name to be used in conjunction with any forecast of future transactions in a manner which may reasonably lead to the belief that the licensee vouches for the achievability of the forecast.
(j) Confidential client information. A licensee shall not without the consent of his client disclose any confidential information pertaining to his client obtained in the course of performing professional services.
This rule does not (1) relieve a licensee of any obligations under subsections (g) or (h), or (2) affect in any way a licensee's obligation to comply with a validly issued subpoena or summons enforceable by order of a court, or (3) prohibit disclosures in the course of a quality review of a licensee's professional services, or (4) preclude a licensee from responding to any inquiry made by the board or any investigative or disciplinary body established by law or formally recognized by the board.
Members of the board and professional practice reviewers shall not disclose any confidential client information which comes to their attention from licensees in disciplinary proceedings or otherwise in carrying out their responsibilities, except that they may furnish such information to an investigative or disciplinary body of the kind referred to above.
(k) Records.
(1) A licensee shall return to a client, upon request, client records. As used in this subsection, "client records" mean any accounting or other record belonging to the client that is provided by or on behalf of the client.
(2) A licensee's workpapers are the licensee's property and need not be made available to the client, except as provided in subdivision (3) hereof. For the purpose of this subsection, analyses or schedules prepared by the client at the request of the licensee for use by the licensee in connection with an attest engagement are licensee workpapers.
(3) A licensee shall make available to a client, upon request, workpapers which contain information not reflected in the client's books and records, and without which the client's financial information is incomplete. Such information includes, but is not limited to, adjusting, closing, combining or consolidating journal entries and information normally contained in books of original entry and general ledgers or subsidiary ledgers. The licensee may require the payment of fees due with respect to the preparation of such information before such information is provided.
(4) Once the licensee has complied with the provisions of this subsection, he need not comply with any subsequent requests to again provide that information.
(l) Discreditable acts. A licensee shall not commit any act that reflects adversely on his fitness to engage in the practice of public accountancy.
(m) Acting through others. A licensee shall not permit others to carry out on his behalf, either with or without compensation, acts which, if carried out by the licensee, would place him in violation of the rules of conduct.
(n) Advertising. A licensee shall not seek to obtain clients by advertising or other forms of solicitation in a manner that is false, misleading or deceptive. A false, misleading or deceptive statement or claim includes but is not limited to a statement or claim which:
(1) Contains a misrepresentation of fact; or
(2) Is intended or likely to create false or unjustified expectations of favorable results; or
(3) Implies educational or professional attainments or licensing recognition not supported in fact; or
(4) Contains other representations or implications that in reasonable probability will cause an ordinarily prudent person to misunderstand or be deceived.
(o) Form of practice. A licensee may practice public accountancy only in proprietorship, a partnership or a professional corporation, organized in accordance with chapter 594a of the general statutes.
(p) Firm names. A licensee shall not practice public accountancy under a firm name which is misleading. The names of one or more past partners, shareholders, or members may be included in the firm name of a partnership, corporation, limited liability company, or its successor. A partner, shareholder, or member surviving the death or withdrawal of all other partners, shareholders, or members may continue to practice under a firm name which includes the names of past partners, shareholders, or members for up to two years after becoming a sole proprietor.
(q) Communications. A licensee shall, when requested, respond to communications from the board within thirty days of the mailing of such communications by registered or certified mail.
(Effective September 23, 1987; Amended October 31, 1996)